In 1996 the United States Congress passed, and President Clinton approved, the Internet Tax Freedom Act. This federal law bars and prohibits state and local governments from imposing fees and taxes on Internet access during the period between November 1, 2003 and November 1, 2014. The law does not prohibit state or local governments from imposing taxes on property purchased over the Internet, but instead prohibits state and local governments from imposing taxes on gaining access to the Internet. It prohibits taxes on Internet access regardless of whether the taxes are imposed on a provider of the Internet access or a buyer of the Internet access. Simply stated, it prohibits state and local governments from taxing a service that enables users to connect to the Internet in order to access content, information, or other services offered over the Internet.
Although the law as it is written applies to state and local governments, some Internet providers have been accused of adding Internet access fees and taxes to their customers’ bills. For example, a federal court in Illinois recently approved a class-action settlement in a case against AT&T Mobility, in which its customers allege that the company violated the Internet Tax Freedom Act by charging the customers for taxes, fees and surcharges on Internet access for certain services, including smart-phone data features, iPhone data plans, and personal Blackberry plans. As another example, Sirius XM radio was recently sued in federal court in California by a customer who alleges that the company violated the Internet Tax Freedom Act when it charged him an extra fee when he purchased Internet radio services, alleging that the additional fee charged was an unlawful tax on his access to the Internet.
Readers may have heard of the process of cramming, which is the practice by which additional charges are crammed onto consumers bills. Many bills that people get, particularly from telecommunications companies, are difficult to understand, which makes it easy for big companies to cram the bills with unwarranted charges. People should carefully check their bills to make sure that all charges are valid, and should be aware of the fact that they cannot be charged taxes or other fees on their access to the Internet, because of the federal law which prohibits taxes on Internet access.
If you or someone you know has been charged taxes on your access to the Internet, please contact us so that we may discuss your legal options.